Former hawkish Fed member Brad: Should not abandon the plan to raise interest rates once more this year.

On Wednesday, September 6th, former US Federal Reserve Chair and hawkish policymaker Brad stated that when policymakers update their forecasts later this month, they should continue to expect another interest rate hike this year.

Brad said:

Based on the data we have obtained, it may be wise and necessary to continue raising interest rates from a risk management perspective.

The market believes that the Federal Reserve is evaluating whether the current level of interest rates has sufficient restrictiveness to slow down demand and bring the inflation rate back to the 2% target. In July of this year, the US core inflation rate, excluding food and energy, was 4.2%.

Brad stated that Powell's view that the struggle against inflation is not yet over is correct. He said:

I think Chairman Powell was right when he said at the Jackson Hole Symposium that the struggle against inflation is not over, and core inflation has not yet fallen to 2%. We must maintain future flexibility as inflation may stagnate or even rise again.

According to statistics from the Chicago Mercantile Exchange, the market currently expects a very low probability of another interest rate hike at this month's Federal Reserve meeting, with approximately a 50% probability of another rate hike in November, while rates are expected to remain unchanged in December.

Christopher Waller, one of the most hawkish officials within the Federal Reserve, stated on Tuesday that given recent data showing a continued slowdown in inflation, policymakers at the Federal Reserve can "proceed with caution" on the issue of interest rate hikes. There is no indication that the Federal Reserve needs to take immediate action, and Waller supports keeping rates unchanged at the September FOMC meeting and waiting for more data in the future.

However, prior to the July FOMC meeting, Waller stated that he believed it was necessary to raise interest rates twice by 25 basis points this year as a necessary condition for moving inflation towards the Federal Reserve's target. He voted in favor of a rate hike at the subsequent July policy meeting. Waller has not commented on whether another rate hike is necessary, but he has not ruled out the possibility of further rate hikes. He stated that it would depend on future data. He said that data showing a sustained improvement over several months would be needed before the Federal Reserve could say that it has completed the rate hike process.

On July 13th, the St. Louis Fed's official website announced that Brad resigned as the president of the regional Fed and officially left the institution on August 14th. Starting from August 15th, Brad will serve as the inaugural dean of the Mitchell E. Daniels, Jr. School of Business at Purdue University in the United States.

Brad is an influential hawkish official within the Federal Reserve. He worked at the St. Louis Fed for thirty-three years, serving as the president of the regional Fed for the past fifteen years.

Brad used to be a dove, but in recent years, he has become a hawk. He is very adept at using theory to explain why it is necessary to take the initiative in combating inflation. His departure will weaken the influence of hawks within the Federal Reserve, while the influence of several FOMC members who are also vocal but have a more dovish stance, such as Chicago Fed President Austan Goolsbee, may increase. Since mid-2021, Brad has consistently been one of the most prominent hawks among Federal Reserve officials, being among the first to call for aggressive interest rate hikes. As a voting member of the FOMC last year, Brad strongly advocated for rapid rate increases during the peak of the rampant high inflation in the United States.